About the time spring arrives on the Chesapeake, elected officials across the county sharpen their pencils as they begin figuring out the tax levy that will be required for their jurisdictions. In the case of Elkton, that important discussion was underway this afternoon when the political leadership examined budget requests from two departments and discussed the constant yield rate.
Here is the concept behind the constant yield rate. Since Maryland reassesses the value of properties on an ongoing basis, homeowners would see an increase in the amount of taxes they pay unless the rate was reduced to correspond with the percentage of increase. Thus each year the state calculates the rate that will approximately yield the same amount of revenue. If the elected officials desire to have a levy that is higher than the constant yield, the jurisdiction must meet certain state-mandated requirements such as advertising the increase and holding a public hearing. All of that is designed to make sure citizens are informed of the revenue increase.
Elkton’s officials were informed that the current town tax rate is .504 per $100 and that the state calculated that the rate that would yield approximately the same amount of money next year is .464 per $100. A discussion ensued and it was reported that the town would receive almost a half-million dollars in additional income by taking the higher rate. That comes about because of the increase in the assessed value of properties.
While the board discussed Elkton’s primary revenue source, Lewis George, Town Administrator said, the professional staff was recommending the commissioners levy the .504 per per $100, which is an increase to the constant yield. That increase of about 8.6% will yield almost $500,000 in additional revenue for town. A penny increase in Elkton generates about $120,000.
As the Commissioners considered the implication of the administrator’s recommendation, Commissioner Storke commented that he had a “lot of trouble with adding an additional burden on the taxpayers.” The staff indicated that this half-million of additional revenue was important to the general budget since there are some significant expenditures and cost increases that will affect the town in the upcoming budget.
The commissioners will continue to assess the tax rate as they get more financial data and examine budget requests from departments.